Sri Lanka’s dangerous quest for cash from China and India

Between dragons and elephants:

By SANJA DE SILVA
JAYATILLEKA-August 27, 2017, 8:33 pm 

"As the stand-off between the Indian and Chinese militaries enters its third month at Doklam…The entire neighbourhood is watching"-Suhashini Haider, The Hindu, 11.8.2017

There is a situation brewing about four kilometres away from the "crest of the mountain range separating the waters flowing into the Sikkim Teesta and its affluents from the waters flowing into the Thibetan Machu and northwards". These lyrical words in the 1890 Tibet-Sikkim Convention between the British and Qing Empires, define the boundaries between China and Bhutan, which China cites in its claim for territory at the border in Doklam in its on-going dispute with India since June this year.i

Sudheendra Kulkarni, head of Observer Research Foundation, writing on the 22nd of August 2017 warned that "…the current deepening mistrust between India and China…even carries the seeds of an armed conflict over the prolonged military standoff at Doklam."

India’s other neighbours are watching the situation closely, but is Sri Lanka? Nepal’s Deputy Prime Minister Krishna Bahadur Mahara has already said it "will not get dragged into this or that side in the border dispute".

While border disputes are common on the India-China border, and the foreign editor of the Hindustan Times, Pramit Paul Chaudri writes that it is almost a weekly event along the disputed Himalayan border, there is something different about this particular dispute. Indian commentators point out that it is the first time that "it is not taking place in Indian soil or Indian claimed territory".ii

Today, as both countries expand their interests regionally and globally, Chaudri points out that India and China are "more likely to run into each other in third countries". In the context of the rapidly changing dynamics between these two emerging powers in our region and indeed globally, Chaudri argues that "a new set of understandings will need to be worked out in the coming decades. Unfortunately, as has happened in the past, it will take a number of crises at a number of flashpoints to occur before New Delhi and Beijing accept the goalposts have shifted and the playbook needs to be updated."

Of great concern to Sri Lanka is his conclusion that "it is in this transition period during which miscalculations are most likely to happen."

Why is the Doklam stand-off of relevance to Sri Lanka? It brings home sharply the vulnerabilities inherent in the current relationship between China and India, which has now for the first time, spilled over into the territory of another country, Bhutan. And with each day, the tensions have escalated. There have been stones thrown at each other at the border. Unprecedentedly, the most recent reports indicate some acts of physical aggression, although Chaudri writes that, "none of the soldiers carry weapons and have had no physical contact".

There is a perception at least in some Indian diplomatic circles that Doklamrepresents an act of arrogance on the part of China. Jeff M.Smith, Director of Asian Security at the American Foreign Policy Council writes in a piece entitled ‘High Noon in the Himalayas’ that "One senior diplomat…recently explained to me that the PLA’s border activities are orchestrated by Beijing…They are designed to embarrass India’s leadership…underscoring Modi’s inability to secure India’s sovereign borders…No issue has garnered more friction than China’s creeping inroads into both the Indian Ocean and the subcontinent."iii

The danger to Sri Lanka’s lies in this perception, in view of the plans to lease for several decades the Mattala airport to India, less than 24 kilometers away from the Hambantota seaport and a large swathe of surrounding land which has been leased to China for 99 years. Sri Lanka has to be suicidal to even consider leasing this airport to India, situated so close to the Chinese owned (at least for the next 99 years) seaport of Hambantota. Standing empty at the moment, India’s interest in it is surely not for Mattala’s enormousprofitability. And no one could be more aware of this than China.

It is commonly believed that India played a role in Sri Lanka’s change of government at the elections held two years ago which brought the Unity Government to power. However, while the leader of the UNP promised during campaigning to shut the Colombo Port City project as soon as the ‘unity’ coalition wins, and did stop all work there and in Hambantota for several months, which must have pleased the Indian Government not to mention the other geopolitical player in the region, the United States, the new government re-started the projects on far more favourable terms to China so as to compensate the latter for the losses incurred by the disruption.

Suhashini Haider puts it bluntly when she writes that "India must recognize that picking sides in the politics of its neighbours makes little difference to China’s success…" She recognizes that Sri Lanka and indeed the Maldives did little to change course after their governments changed and calls India’s UPA’s role in these outcomes a mistake. She also states that India was accused of bringing Pushpa Kamal Dahal aka "Prachanda" to replace Prime Minister Oli in 2016 in Nepal.She urges the Indian government that doing better with its neighbours "is about following a policy of mutual interest and respect".

While many hope that the Doklam stand-off may get resolved when the leaders of both countries attend the BRICS summit in the first week of September, some worry that it will depend on whether the "boundary contest escalates in to a full blown India-China crisis...It might just push New Delhi to weigh options for a bilateral deal with the US".ivThis will have far reaching consequences for the region.

In a different time, in the past, Sri Lanka which cannot remain unmindful of developments in the region, could have been expected to play a role to defuse tensions. Nimmi Kurian,Associate Professor at the Centre for Policy Research, New Delhi and Faculty Advisor, India China Institute at The New School, New York, describes the growing dispute in Doklam as "the larger normative contest between India and China for regional leadership". She laments that "India’s crisis of diplomacy has often worked without a credible notion of what the endgame is". (This description seems far more apt for the Unity Government of Sri Lanka than for India.) However, she offers a solution. She asks if "as a possible exit strategy from the stand-off, could India signal some sort of a qualified engagement in the OBOR initiative?" She contends that this is not so far-fetched since India is already a participant in AIIB and the Bangladesh- China- India- Myanmar Economic corridor. One can only hope that the BRICS summit will provide the platform to explore such strategies.

Colombo’s Unity Government made much of the large debt it is supposed to have inherited when it assumed power two years ago, and announced to the country that it had no option but to lease Hambantota to China to settle those debts. Unfortunately things didn’t stop at that. Since then, it has been looking to sell as many assets as it can to other countries/foreign companies for ready cash. The Government’s policy makers seem unable to find another way which doesn’t endanger Sri Lanka’s national interest. They seem loath to even consider exercising the critical restraints on ownership by limiting foreign investment to a proportion which ensures Sri Lankan control of the assets.Their first priority seems to be to sell something to India, ostensibly for more cash, but more likely to appease and reassure it that Sri Lanka is not veering in the direction of China and is willing to balance off China by readjusting toIndia’s geopolitical ambitions.

On his visit to Delhi, the PM was in discussion with India about leasing Sri Lanka’s most treasured asset, the Trincomalee harbor, amidst protests by the Opposition, trade unions, professional associations and citizens. But now the government has embarked on a project that may turn the deep south of our country into a needlessly "disputed area", by invitation.

Shashank Joshi, Senior Research Fellow of the Royal United Services Institute in London, writes that "Even before the [Doklam] crisis, India-China relations were at their lowest ebb in a decade."v He suggests three reasons that may have contributed to India’s sense of grievance as "Beijing’s growing support for Pakistan, the sweeping Belt and Road Initiative (BRI), obstruction of India’s efforts to join the Nuclear Suppliers Group (NSG)." As for China’s attitude towards India, Joshi suggests that a geopolitical factor that may have influenced it as "India’s growing relationship with the United States and Japan…" in addition to feeling "slighted by India’s public denunciation of BRI in May."

These unresolved and burgeoning issues at the heart of the relationship between these two regional giants (one of which is a global economic giant) who are solicited to make heavy investments in Sri Lanka, have to be factors in Sri Lanka’s own foreign policy, strategic and security calculations.

What is the government thinking? The supposed competence at economics and foreign affairs of the UNP, the decision making partner of the Unity Government, is increasingly looking like just a shadow of a glorious past, artificially enhanced by PR firms more recently. The President is either unwilling or unable to steer the county in the right direction in this time of complex geopolitical contestation, a task he has abdicated to the Prime Minister, whom he considers vastly more proficient in such matters than he. The citizens are now more than ever concerned that all this falls far short of what it takes to run a country.

Iskander L. Rahman, a former associate in the Nuclear Policy Program at the Carnegie Endowment, writing on the Doklam stand-off,quotes a Bhutani journalist’s wry comment that they have so far avoided "both the fire from the Dragon on our heads and also the Elephant’s tusks in our soft underbelly". It is hoped that Sri Lanka does not voluntarily prepare a battleground on its soil for Dragons and Elephants to test their relative strengths. We will not survive it as a single county.